MUSD Board Predicts Crippling Budget Problems

The MUSD School Board laid out dire budget projections for the next three years during its regular meeting Wednesday that will force deep cuts unless the state's fiscal situation changes drastically.

Despite belt tightening over the past few years that has seen a reduction of all salaries by 3%, furlough days, and other reductions (the entire interim fiscal report is available at the MUSD website), the district will see a projected deficit of close to $4 million dollars by the 2013-14 school year if funding stays at current levels. 

Governor Jerry Brown has proposed extending the sales and income tax hikes passed in 2009 to cover some of Sacramento’s budget deficit, but the measure has not yet been put on the ballot by the legislature for voters to consider. 

The plan would extend taxes already on the books for another five years. School Board members weren't optimistic about its prospects Wednesday.

"I don’t think this fixes the problem," board member Bryan Wong said at Wednesday’s meeting. "It puts off the discussion a year or two."

"This is a systemic issue,” board member Chris Rich added. "It is entirely possible that we will not see any of those dollars. We can still be in the same boat."

“We  need systemic changes,” board VP Clare Chesley said. “No, I don’t support this proposition.” 

Even passage of Brown’s "revenue" extension will  force the district to face more difficult choices in making cuts.

"The condition of the State budget is of great concern to schools. MUSD has been informed that if the Governor’s proposed tax extension passed in June, we will be cutting another $19 per student," wrote Superintendent Linda Wagner in an agenda report. "If the tax extension fails, however, we will be forced to cut $330 to $1,000 per student, which will have a crippling fiscal impact."

A resolution supporting a vote on the extension was tabled until the next meeting to make it plain that the board was only supporting taking the issue to the voters. 

And that is not all. School Services, which helps districts understand the legal and budgetary processes, has told districts to expect a $330 per student reduction for next year. Connie Wu, the district’s Chief Business Officer, said at Wednesday’s meeting that other sources, including the Los Angeles County Office of Education, have pegged the cut back as high as $1,000 per student. 

When pressed on which number should be used to try and create a future budget, Wu repeatedly told the board that the state was saying the $330 per student cut was the figure to use.

"That’s the optimistic number," Wong said. "The state is asking us to take the low number in the estimate."

"These numbers are staggering to us," Wong added. "They are eye popping."

Basic school funding is calculated using Average Daily Attendance (ADA), allocating to districts a fixed amount per student. The district has already initiated a drive to improve student attendance. 

The district has also cut $18.5 million dollars, or about $1,900 per student, in spending over the past 3 years. 

The problem with these projections is that districts are required by law to figure their budgets three years in advance, while the state legislature only grapples with a yearly budget. The uncertainty that plagues districts across the state. 

Exacerbating the problem is the fact that the state legislature is chronically late in passing a finalized budget. The last budget was not passed until the school year had started, making sound financial planning impossible. The district had to make adjustments to the current year’s spending plan because of state budget delays.

In addition to that, although Sacramento has approved Cost of Living Adjustments (COLA) to school budgets, they have "deferred" payment of COLA money, meaning that in reality, the funds given Monrovia were 1.67% less than what was promised. 

That figure could be as high as 2.3% less by the 2012-13 school year. 

To even further complicate matters, the district will be losing $7 million from a one time federal stimulus grant that funded job creation.

These dire predictions forced the board Wednesday to “self qualify” the district’s second interim report for the three years ending June 30, 2013. This means that at this time, the board understands that MUSD will not be able to meet it’s financial obligations in future school years. 

This reluctantly made decision will not impact the district’s ability to negotiate or seek help through the county, Wu said.

“Nobody has a clue,” board president Ed Gililland said. “It’s budgetry on the whims of whatever political winds are blowing.”